Share-Based Compensation

12 Months Ended

Dec. 31, 2025

Share-Based Payment Arrangement [Abstract]

The Beauty Health Company 2021 Incentive Award Plan (the “2021 Plan”) became effective upon the consummation of the Business Combination. Pursuant to the 2021 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, other stock or cash based awards to eligible service providers. The aggregate number of shares of the Company’s Class A Common Stock that may be issued pursuant to awards granted under the 2021 Plan is the sum of (i) 14,839,640 and (ii) an annual increase on January 1 of each calendar year (commencing with January 1, 2022 and ending on and including January 1, 2031) equal to a number of shares equal to 4% of the aggregate shares outstanding as of December 31 of the immediately preceding calendar year (or such lesser number of shares as is determined by the Company’s Board of Directors), subject to adjustment by the plan administrator in the event of certain changes in our corporate structure. The maximum number of shares that may be granted with respect to incentive stock options under the 2021 Plan is 7,500,000. At December 31, 2025, approximately 14 million shares of the Company’s Class A Common Stock were reserved for the issuance of awards under the 2021 Plan.

Restricted Stock Units (“RSU”) and Performance-based Restricted Stock Units (“PSU”)

The Company reserves the right to grant RSUs to certain employees, executives and directors. The RSUs granted are eligible to vest over the service period, which is generally over three to four years, subject to the recipient’s continued employment through each vesting date.

PSUs are granted to select executive officers pursuant to the 2021 Plan and vest based on either (i) the performance of the Company’s Class A Common Stock (“Top-hat”) or (ii) the total shareholder return of the Company’s Class A Common Stock relative to a defined peer group (“TSR”).

Top-hat PSUs are earned over a three or four-year performance period, based on the attainment of pre-determined goals related to the performance of the Company’s Class A Common Stock, and subject to the recipient’s continued employment

through the end of the performance period. The actual number of shares of the Company’s Class A Common Stock to be issued related to Top-hat PSUs will range from 0% to 100% of the number of PSUs granted.

TSR PSUs are earned over a three-year performance period, based on the attainment of pre-determined goals related to the Company’s total shareholder return relative to a defined peer group, and subject to the recipient’s continued employment through the end of the performance period. The actual number of shares of the Company’s Class A Common Stock to be issued related to TSR PSUs will range from 0% to 200% of the number of PSUs granted.

The fair value of PSUs is recognized on a straight-line basis over their measurement period as compensation expense, and is not subject to reversal even if the market condition is not achieved. The fair value of PSUs was determined using a Monte Carlo simulation subject to the performance conditions of the underlying PSUs with the following assumptions:


Input	2025 Grants	2024 Grants	2023 Grants
Risk-free interest rate	3.6% - 4.0%	4.5%	3.5%
Expected volatility of the Company’s Class A Common Stock	102.6% - 120.1%	101.5%	74.9%

The following table summarizes the Company’s RSU and PSU activity for the year ended December 31, 2025:


			Weighted Average Grant Date Fair Value
	RSU Shares	PSU Shares	RSU		PSU
Outstanding - January 1, 2025	7,254,391	1,237,822	$	4.56	$	5.93
Granted	12,696,497	2,406,261	1.38		2.28
Vested	(3,217,346)	(441,558)	4.72		3.11
Forfeited	(4,422,096)	(1,007,055)	2.53		4.09
Cancelled(1)	—	(41,240)	—		20.21
Outstanding - December 31, 2025	12,311,446	2,154,230	$	1.97	$	3.02

(1) Cancelled PSU shares represent TSR PSUs that were not earned for the performance period that ended during the year ended December 31, 2025.

The fair value of RSUs that vested, determined based on their respective fair values at vesting date, during the years ended December 31, 2025, 2024, and 2023 was $4.6 million, $5.9 million, and $9.7 million, respectively. The fair value of PSUs that vested, determined based on their respective fair values at vesting date, during the year ended December 31, 2025 was $0.9 million. There were no PSUs that vested during the years ended December 31, 2024 and 2023.

The weighted average grant date fair value of RSUs granted during the years ended December 31, 2024 and 2023 was $3.17 and $8.58, respectively. The weighted average grant date fair value of PSUs granted during the years ended December 31, 2024 and 2023 was $5.27 and $17.54, respectively.

At December 31, 2025, the aggregate unrecognized compensation cost for unvested RSUs and PSUs was $16.3 million and $4.2 million, respectively, recognized over a weighted average period of 1.9 years and 1.8 years, respectively.

Stock Options

The following table summarizes the Company’s stock option activity:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding - January 1, 2025	3,483,070	$	13.64	5.29	$	—
Granted	—	—
Exercised	—	—
Forfeited	(74,475)	15.45
Expired	(948,675)	13.81
Outstanding - December 31, 2025	2,459,920	13.51		5.37	—
Vested and Exercisable - December 31, 2025	2,457,295	13.50		5.37	—
Options vested and expected to vest - December 31, 2025	2,459,920	$	13.51	5.37	$	—

At December 31, 2025, aggregate unrecognized compensation cost for unvested stock options was immaterial. The stock options granted generally vest over a four year period.

There were no stock options granted during the year ended December 31, 2024 and 2023.

The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option. There were no stock options exercised during the year ended December 31, 2024. For the year ended December 31, 2023, the total intrinsic value of stock options exercised was immaterial.

Employee Stock Purchase Plan (“ESPP”)

In 2024, the Company suspended the ESPP for employees located in the United States, which became effective upon the consummation of the Business Combination. Under the ESPP, eligible employees can have up to 10% of their earnings withheld, up to certain maximums, to be used to purchase shares of the Company’s Class A Common Stock at certain purchase dates. The price of the Company’s Class A Common Stock purchased under the ESPP for the offering periods is equal to 85% of the lesser of the fair market value of a share of Class A Common Stock of the Company on the beginning or the end of the offering period.

The aggregate number of shares of the Company’s Class A Common Stock initially reserved for issuance pursuant to rights granted under the ESPP was 2,000,000. In addition, on the first day of each calendar year beginning on January 1, 2022 and ending on (and including) January 1, 2031, the number of shares available for issuance under the ESPP will be increased by a number of shares equal to the lesser of (1) one percent (1%) of the shares outstanding on the final day of the immediately preceding calendar year, and (2) such smaller number of shares as determined by the Company’s Board of Directors. As of December 31, 2025, approximately 6 million shares were reserved for the future issuance under the ESPP.

Share-Based Compensation Expense

Share-based compensation expense was as follows for the periods indicated:


	Year Ended December 31,
(in thousands)		2025		2024		2023
Cost of sales		$	519	$	52	1,513
Selling and marketing		2,710		7,716		7,962
Research and development		512		345		1,425
General and administrative		11,083		18,583		11,644
Total share-based compensation		$	14,824	$	26,696	$	22,544